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IRS Still Failing On Contractor Tax Debt Checks

by Scott Hamilton, Tax-News.com, Washington

12 August 2016


The US Internal Revenue Service (IRS) still does not effectively screen its contractors for federal tax delinquencies, according to an audit report recently released by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA pointed out that, since fiscal year 2012, annual US appropriation acts have prohibited the IRS from making contract awards to corporations with unpaid federal tax liabilities. Its audit was therefore initiated to determine whether IRS contracting officers are completing the required tax checks to ensure that contractors with serious delinquencies do not receive taxpayer funds through contracts with the agency.

However, TIGTA found, as it had previously, that the IRS tax check process was not effective in identifying tax delinquent contractors. As a result, the IRS remains at risk of awarding contracts to entities that are not in compliance with tax law.

Current IRS policy requires a tax check for all bidders for contracts greater than USD250,000. Nevertheless, when TIGTA reviewed a statistical sample of contract awards, it found that 29 percent did not have evidence that such checks had been performed. In all of the contract awards, there was no evidence that the other qualified bidders also underwent a tax check, as required.

TAGS: individuals | compliance | tax | business | tax compliance | law | Internal Revenue Service (IRS) | tax authority | contractors | United States | Tax

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